EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0720078
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Nylex Industrial Products Pty Ltd applied for a TCO in respect of certain car mats on 26 November 2007.
Instrument
TCO No 0720078 was made on 29 February 2008. It declares that those certain car mats are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 10%. The rate of duty for the goods subject to the TCO is free.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 0720078 is taken to have come into force on 26 November 2007.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Customs Act 1901 was enacted to regulate and facilitate the import and export of goods into and out of Australia. It established a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs to reduce customs duty on specific goods. This was introduced to address the problem of ensuring that Australian consumers and businesses have access to a diverse range of products at competitive prices, while also protecting local industries from undue competition. The Tariff Concession Instrument No. 0720078, made under the authority of the Customs Act, provides a specific example of this regulatory approach. This instrument, created by the Parliament, aims to facilitate trade by reducing the duty on certain car mats to zero, provided no substitutable goods are produced in Australia. This measure is intended to benefit importers by allowing them to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force.
Scope and Application
The Tariff Concession Instrument No. 0720078, made under the Customs Act 1901, applies specifically to certain car mats as designated by Nylex Industrial Products Pty Ltd, which sought a tariff concession order (TCO) from the Chief Executive Officer of Customs (CEO). The Act facilitates tariff concessions for goods not produced in Australia in the ordinary course of business, thereby allowing for reduced or free customs duties. The TCO applies to the goods specified in the instrument and is effective from the date the application was lodged, which in this case was 26 November 2007. The geographic reach of this legislation is national, as it operates under the auspices of the Commonwealth of Australia. The application of this TCO does not disadvantage any persons other than the Commonwealth and does not impose any liabilities on anyone for actions taken before the TCO's effective date. The CEO is required to publish a notice in the Gazette inviting submissions against the TCO, though in this instance, no submissions were received. This instrument extends the application of the Customs Act 1901 by providing a mechanism for tariff concessions for specific imported goods.
Key Provisions
The Tariff Concession Instrument No. 0720078, made under the Customs Act 1901, provides a lower rate of customs duty for certain car mats, as specified in item 50 of Schedule 4 to the Customs Tariff Act 1995. The instrument was made on 29 February 2008 following an application by Nylex Industrial Products Pty Ltd on 26 November 2007. The Chief Executive Officer of Customs (CEO) determined that a Tariff Concession Order (TCO) was appropriate as no substitutable goods were being produced in Australia at the time the application was lodged, fulfilling the core criteria outlined in section 269C of the Act. The general duty rate of 10% on these goods is reduced to free under this TCO, effective from the date of the application, 26 November 2007.
The Customs Act 1901 imposes several obligations on parties involved in the TCO process. Section 269F allows a person to apply to the CEO for a TCO in respect of goods, provided the goods are not specified in section 269SJ as those that cannot be subject to a TCO. The CEO must assess the application against the criteria set out in sections 269B, 269C, and 269D, ensuring that no substitutable goods are being produced in Australia in the ordinary course of business. Additionally, section 269K requires the CEO to publish a notice in the Gazette, inviting submissions from any interested parties regarding the TCO application. The CEO must consider any such submissions before making a final decision on whether to issue the TCO.
Failure to comply with the provisions of the Customs Act 1901 can lead to several consequences. If a person knowingly or recklessly contravenes a provision of the Act, they may be liable for a civil penalty as outlined in section 284-25 of the Act. The maximum penalty for an individual is 500 penalty units ($99,500 as of 2023) or six times the value of the benefit obtained, whichever is greater. For a body corporate, the maximum penalty can be significantly higher, reaching up to 50,000 penalty units ($9,950,000 as of 2023) or three times the value of the benefit obtained, whichever is greater. These penalties underscore the importance of adhering to the requirements set forth in the Act when applying for or managing a TCO.